St. Catharines, Ontario, and Whistler, British Columbia, October 1, 2010
2010-089

Archived - Government of Canada Announces New Tariff Measures for Ships for a More Competitive Canadian Economy

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The Honourable Jim Flaherty, Minister of Finance, today announced a new tariff relief measure to help grow Canada’s shipping industry and the jobs it creates. The announcement was also made by the Honourable Stockwell Day, President of the Treasury Board and Minister for the Asia-Pacific Gateway, at the Union of British Columbia Municipalities Convention in Whistler.

The new duty remission framework will lower costs for the industry by waiving the 25-per-cent tariff on imports of all general cargo vessels and tankers, as well as ferries longer than 129 metres. Remitting the 25-per-cent tariff is expected to save shipowners $25 million per year over the next decade.

The measure builds on the Government’s recent aggressive tariff relief to support the manufacturing sector, and supports Canada’s Economic Action Plan’s objectives of lower taxes and promoting a more competitive economy.

“This initiative responds to Canada’s need to maintain a modern and efficient shipping industry that serves as a vital transportation link for Canada’s internal and external trade in agriculture, mining and manufacturing,” said Minister Flaherty. “Today’s announcement will bring certainty and predictability for all stakeholders in the marketplace. The new duty remission framework will help ensure a stronger Canadian economy and a brighter future for the marine transportation service sector and for the many sectors that rely on them.”

“This duty relief will accelerate the renewal of the Canadian marine fleet across the country and will help replace aging vessels with cleaner, safer and more efficient ships,” said the Honourable Chuck Strahl, Minister of Transport, Infrastructure and Communities. “All the while, it will build on unprecedented investments our Government has made in Canada’s infrastructure and gateways by contributing to the upgrading of marine transportation links across the country.”

Under the Customs Tariff imported ships are subject to a tariff rate of 25 per cent, the highest rate of duty for industrial goods. Numerous stakeholders have emphasized that duty costs on these imported vessels are passed on to Canadian producers and users through increased shipping rates. In public consultations late last year, proposed duty relief received support from provincial governments, marine industry associations, vessel operators, port authorities and representatives of the energy, agriculture and steel industries, among others.

To complement the new duty remission framework, which will be retroactive to January 1, 2010, the Government of Canada also made decisions on outstanding company-specific duty relief requests made by BC Ferries and Algoma Central Corporation before January 1, 2010. The duties remitted in these requests amount to $119.4 million and $15 million, respectively. The vessels covered by these remission orders would now qualify for duty relief under the tariff framework announced today.

“I appreciated working collaboratively with all interested parties. The results produced will benefit all industries that are dependent on shipping services as well as users of ferry services, as confirmed by BC Ferries,” said Minister Day.

BC Ferries has announced a 2-per-cent ferry rate reduction effective October 18, 2010.

Full details on the duty relief announced today will be published in the Canada Gazette, Part II on October 13, 2010.

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For further information, media may contact:

Annette Robertson
Press Secretary
Office of the Minister of Finance
613-996-7861

Jack Aubry
Media Relations
Department of Finance
613-996-8080

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